and the irs launching another case of class warfare against americans. "the kudlow report" moments away. okay, remember i said we're playing a game of volleyball. today, we rotated back into the china on stocks, which are principally the oil stocks and a lot of rumors around that china is going to cut rates as early as next week. i don't traffic in rumors. what i think is happening here is that one group gets the money and another group, but the money doesn't leave, and 2012 is so much better than 2011. always a bull market somewhere. promise to find it right here on "mad money." i'm jim cramer, see you money. hey, sully, back at it again? >> ending the week, jim, with breaking news to begin the show. good evening, everybody. i am brian sullivan in for larry. this is "the kudlow report." story one tonight. breaking news. smoking gun, internal memos allegedly show that jon corzine okayed moving millions in customer cash to cover losses,

all as mf was collapsing. remember when he told congress he did not do that. was he lying? folks, this story is moving fast. we're all over it. story two tonight. oil spiking north of $108. the highest in three weeks. yeah, gas prices climbing yet again. $3.89 a gallon nationwide. and with the stunt with keystone, some demes are prepping a bill that would hike taxes on oil companies. ramping up for the big fight over obama care. aside from the cost to you the taxpayer or business owner, next week's battle, a monumental week in american history, that happens every has too do with what the government can and cannot compel you to do. mitch mcconnell today. >> if the court upholds that, could the federal government then order you to eat carrots? >> is this the last standoff as

columnist george will says the last exit on the road to unlimited government? well, we begin tonight with that breaking news. leaked, smoking gun memos, allegedly pin jon gore zine squarely in the middle of the collapse of mf global. what have we learned, eamon? >> we learned a lot about the dramatic final moments of mf global as that firm spiraled into bankruptcy back in october and we're learning what was going on in the firm at that time it happens. according to the house financial services committee which released a new memo on this today, an interesting nuance between jpmorgan and mf global. jpmorgan so nervous in the final days with mf global, they asked the firm to sign a letter assuring that all transferring of moneys complied with rules.

but mf global never returned that letter, and edith o'brien is portrayed as reluctant to sign jpmorgan letter. o'brien has been subpoenaed to appear before congress next week. initially, she did not want to testify. they are going to make her testify along with a host of other mf global executives and then there is this. dramatic e-mail from edith o'brien, about a $200 million transfer from a segregated customer account in which o'brien writes, per jv.c.'s, tht is jon corzine's, direct instruction. that seems to be at odds what corzine suggested just last year when he testified on capitol hill. take a listen to how he characterized all this last year before congress. >> let me be clear. the last few days of mf global were chaotic. i did not instruct anyone to lend customers to mf global or any of its affiliates, nor was i

told that anyone had done so. >> now, brian, as you know, a lot of nuance here and a lot will depend on the context of e-mails, what the legality of these were and who issued what orders to whom at what time in final days. still a lot we don't know. but that e-mail is pretty dramatic, and it's much different than what we heard before about corzine's role in those final days, brian. >> thank you very much, eamon javers. >> you bet. >> let's dig into the legal implications for jon corzine and mf global. we have a lawyer that heads up the white collar crimes group. it is against federal law to comingle firm money and customer money if this e-mail turns out to be accurate what could it mean for jon corzine? certainly, liability on several levels. and the justice department is involved and they are the

800-pound gorilla in the room and the ones you need to be most concerned of right away. also civil implications with civil regulators like the scc, tfcc and they line up and then have you liability to in the bankruptcy court, to -- have you liability to the customers whose accounts, those funds represent. and investors generally, it becomes a perfect world wind of potential landmines. >> if you listen to the corzine sound bite, what he said in congress was he did not order the transfer of the money to mf global. what if he ordered the transfer to jpmorgan? >> well, he actually said he didn't authorize anyone to lend any money -- any customer money. >> and it's the language. lend, not transfer. mf, not jpm. >> he said final days, everything chaotic, fluid and it

undoubtedly was, and different people are asking different people for different authority, and we have here a congressional investigators memo, based upon an e-mail which we haven't seen. based upon that person's version of what she was told in another conversation by jon corzine so that adds several layers of uncertainty. so -- someone could argue she mischaracterized what he said. what about the perjury aspects? >> perjury is very specific. it has to be knowing, exact. nuances are very important. he said didn't authorize anybody to lend. he also said i don't know what happened to the money, and, you know, it could come down to if it all plays out and he did say something like this, to edith o'brien, then it might come down to, well, what did that mean? what did you mean by that? and then it becomes an understanding what his conversation was -- >> in my future, i see a bus and various people at mf possibly throwing each other under that

bus. >> and during the time when he has two telephones to his head and maybe somebody on the speakerphone while he's typing e-mails in order to keep his business afloat. very cat on the chaotic. this immediate focus, concern, is what happened to the customer money, segregated money. that's a bright-line thing. something had to have happened and we'll find out. that will sort out. or tom, thank you. let's turn to other top stories. oil spiking over $108 per barrel at one point in the session. clearly, the president's pr move in curbing, oklahoma, did nothing to lower prices and take a look at this lead headline in "the new york times" today. if the u.s. has almost reached energy independence, why are prices still so high? here is cnbc's sharon epperson. can you answer that? >> let me tell you why prices got so high today. if you look at wti oil futures,

10:00 a.m. a spike above $1208 per barrel. a lot of chatter in the marketplace about israel, about, of course, concerns continuing about iran and only takes the perception that something might happen to make people very concerned about what may happen in terms of what oil supplies coming from iran. especially from the oil embargo afterward us in july. new research by citi this week shows north america could soon become the middle east. it's the fastest growing oil and gas region in the world. likely to remain so for the next decade. and supply growth is surging. due to the explosion in several areas, deep water, shale, alaska, natural gas, biofuels, canadian imports, other heavy types of crude as well. the domestic supply could reach over 20 million barrels per day by 2020, double the amount we have today. it has grew so rapidly, they are now encountering infrastructure

restraints, growing faster than technology allows, and that's why there is so much talk about the keystone pipeline. that will take crude oil from curbing, oklahoma, to the texas gulf coast. those pipelines that will be able to recorrect flies out into the coast and then into the world markets. what will that do you do? that will change this major trade for the last year and a half. and that's the wti spread. blown out because of geopot particulars and t -- geopolitics. maybe prices will start to converge and come closer together as oil gets out. >> sharon epperson, thank you very much. >> sure. >> with gas prices surging, the senate will vote on a bill that will strip tax breaks offered to big oil and return, use that revenue to boost renewables. the move will clearly be liked by many who think big oil is not doing its fair share tax wise.

oil and gas drilling, one of the leading job createors in the upper midwest. would a move like this hurt jobs? cnbc contributor jared bernstein and vice president joe biden. we'll get to both guests in a second. i want to begin with you. listen, the argument about what tax rates big oil exon in particular, always targeting, biggest, actually pay is one thing. do you think a bill like this has legs? will it happen? >> i think it has legs in the senate. whether it goes much further, i don't know. the president is a big supporter of this action. the place i'm coming from on this, and i thought sharon taking us through the production is really quite eye opening. the amount of domestic production, the increases therein, i think have been very impressive, and certainly give the president a kind of street credibility on that side of the issue, so he can go after more renewables, the thing i don't understand is why -- and you know, i'm usually the progressive guy here.

here i'm the free marketeer, why does this industry need tax subsidies and why are people on the conservative side arguing for it? i don't get it. >> phil, talk to that argument that jared just brought up. we can argue that every industry in this country gets some kind of tax subsidy. >> brian, we're against all subsidies for all energy technologies and a telling vote on the floor of the senate last week when jim demint put a bill to? to renew subsidies, and only got 26 votes, and not a single democrat. but this menendez bill doesn't end subsidies at all, it ends legitimate tax reductions that other companies can take advantage of. it is a crazy thing to do when prices are already high to say our solution is to put higher

taxes on these companies which can only raise prices, no way to lower them. hy do you rob banks? that's where the money is. they are going after big oil because of big profits. >> i disagree -- first, i very much respect phil's point. if you are going to go after subsidies, let's go after subsidies, and i see no reason why we shouldn't start with a very highly profitable set of industries that don't really need them to be successful. and that's the extraction industries. i disagree with his point that they aren't getting special breaks. look at the intangible drilling, they get to immediately expense costs that other industries have to expensory the life of their equipment. >> let's have full expenses for everyone. let's have immediate expensing for all capital expenditures across every industry. that would be great. >> if that's where you want to if that's different. all i'm saying, you're incorrect to say they don't have special treatment, which they do in this

case. >> jared, excuse me gentlemen. you could also argue that low-cost government loans to solar companies are also a massive form of subsidies. >> yes, you could. and that's a different argument, and i probably would find -- >> it's the same argument. energy producers, job creation. >> agree. >> i think it is the same argument. what's different about it, are you talking about a new, immature industry that some people, and i guess i put myself in that camp, would argue they actually need a subsidy, we are investments in slar and wind is actually suboptimal right now. >> how many centuries before they aren't an infant industry anymore? they have the economic -- >> to be fair this say totally different technology. i understand the point. >> the commercial -- >> i'm not in favor of subsidies one way or the other. i will say this. if we need all forms of energy or face blackouts and energy shortages what is wrong with

giving a little bit of a nudge? hard for me to say this. but giving a nudge to an industry to help them out? >> well, i mean, the problem is that they aren't picking up the tab, resources poorly allocated and it affects subsidies for states that mandate renewable sources, and two of them amass the co the costs. when it's turned on, it's way up, when it's turned off, way down. so that's not likely the other fossil fuels. it does need that boost right now. i take your point over the longer term. >> we had a good constitution. have to leave this there. like how you took the free market side, and let's help out solar. freaky friday on "the kudlow report" coming up, biggest market story of the day did not come from the nice or nasdaq.

came from other market called bats, and a total disaster. that story, coming up. plus, what ultralow volume says about bulls and bears next week. and don't forget what larry says o on his own show. free market capitalism is the best path to prosperity. back after this. a route map shows you where we go. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world.

welcome back to "the kudlow report." big news out of the scc, the wall street journal and a shot across the bow. "the wall street journal" says the sec is looking at certain player of the market, high frequency traders, have an unfair advantage because of relationships with computerized markets. joe is one of the lead guys in criticizing high-frequency trading is hurting the retail investor and join us now joe, your take on the article in "the wall street journal," i have to imagine you are happy with this news if it is true. the s.e.c. is investigating this. >> we're excited to see that regulators are taking it more seriously. this has been going on for years. market structure in the united states has been so corrupted and distorted and fragmentation is a

word we use all the time. over 40 stock exchanges competing for the high-frequency trading flow. the web of interconnected market centers held together by flew, called high-frequency trading, the question, what's going on inside these boxes, what's going on inside the routes. is there any sort of manipulation? that's what we're hoping see. and, in fact, the high-frequency trading guys should be happy. if there isn't anything going on, they feel they can get exonerated quickly. >> the investigation, still at a very early stage. no allegations of any wrongdoing of any kind. what do you expect they will find? >> well, there is a lot of conflicts of interesti along th way. one thing we focus on all the time, data feeds they supply to high-frequency traders. you have to have processing power to know what's inside there. and we think there is leakage of information going on inside. you could take advantage of that type of information so people

don't call it front running, but you can trade ahead. all sorts of other conflicts and strategies that people have talked about, whether it be momentum ignition, spoofing, layering, other accusations, if i was an hft guy, i would be happy, because they could get exonerated and move on. >> we don't want to get into the weeds here, we're talking about split-second price movements. a lot of our investors are retail investors. they want the best price for what they buy. the practice of co-location, without getting too wonky, the orders and the route done on the same server so you can view things a split second faster, should that be outlawed? >> the co-location, that gets them to the spot faster. they are always going to be there somewhere. and when the changes will argue, we can control it if it's housed under one building. the problem, the entire market structure broke a long time ago. i'll break news with you, brian, we've been working on a book,

out in a couple of months, where we explain everything, my partner, sal arneka, and i. they have to look at the colo and why some guys get advantage over others. >> you and sal have been out in front on this. we appreciate you coming on "the kudlow report". >> thanks, brian. >> another keynote on this topic, you couldn't have a much worse day than the stock market bats. they had an embarrassing series of problems. price at 16, had just one trade in the $15 trade. that lasted literally ten seconds, a series of trays below a penny per share, which forced a halt. finally, bats couldn't work it out. pulled the ipo for the foreseeable future. those bad trades came from bats' own system. and bats, by the way, stands for better alternative trading system. ouch! and this just in from

hewlett-packard. the company is hiking its dividend by 10%. it was expected. company made a promise to shareholders. shares down 8% year-to-date. for the big picture, stocks up across the board. not a big day. but, still, ended on an upnote on a lousy week. dow lost 1.2%, nasdaq up. dan green house, chief global strategist at bitc. jack, are stocks a good buy right now? >> brian, i think they absolutely are. i think we have entered a period where we are now in a kick i had call bull market in stocks. a cyclical bear market. asset allocations throughout the course of the year. what we have seen happen the first three or four months of this year so far, very indicative of what will happen through the year. he we will see continued upward bias with nonbelievers.

people for the last three months, coming out and pleading a bear case. and they've been wrong, simple as that. think what we're looking at is just the beginning. >> dan, you beg to differ a little bit here. not pleading the bear case. you think risk reward doesn't mesh up. >> yeah, from a pure investment these, the meaningful upside case for equities, current levels, given risks as we know them today is quite challenging. i disagree with jack almost entirely. equities can go higher, largely speaking, in the face of a considerable number of risks, not the least of which is the election here in the united states that comes later this year, which introduces an enormous amount of uncertainty with respect to fiscal policy. >> what are you advising clients? >> go ahead, jack. >> let's face it look. >> they have not. >> this market has faced tacky lagsism, stack ambiguity and in

spite of that, we see record earnings out of the s & p 500, and a market, by the way, is trading cheap. >> and by the way, the stock market, a nominal value is roughly speaking exactly where it was in the spring of last year and roughly speaking in the spring of where it was the year before. not meaningfully higher. meaningfully higher from october. but not meaningfully higher from other levels. partially because of the risks you are assessing and that arise later this year. >> jack and dan, a little tight tonight. we'll bring you back soon and have the same discussion. you both love gold. buyer, seller, unless it's a bats trade. that was not fair of me to say. guys, have a good weekend. thank you. >> next tonight, obama care two years on. the supreme court getting involved on monday. the law may be ruled down, may be broken up. may be upheld. the debate and a discussion remember former governor howard de dean, up next.

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welcome back, everybody. i'm brian sullivan in for larry. he'll be back next week. today marks the two-year anniversary of president obama's prized health care reform plan. all eyes will be on d.c. for another reason on monday. the supreme court begins three days of highly anticipated hearings on the laws. and "the last exit ramp on the

road to unlimited government." nbc's pete williams joins us now. this will be an unbelievable three days in washington, d.c., is it not? >> it is very much so. the question is not whether this is a good idea, but whether it's constitutional. the challengers, 26 states, the national federation of independent businesses and some individuals claim while the constitution gives power the congress to regulate commerce, congress doesn't have the power to regulate people who are not engaged in commerce. they say someone who does not have insurance cannot be forced to gout a go out and buy it. that's a violation of what congress is allowed to do, and they say the central problem with the law is the individual mandate. obama administration responds, no, it's not regulating the insurance market. it's regulating the broader health care market and everybody is in that one way or the other, because if they show up at the emergency room and don't have insurance, the costs get shipped

to the people who do have insurance, and that's definitely commerce. very quickly, on monday, the court confronts whether it can even hear this case now, or whether the challengers have to come back after the law goes into effect, perhaps in 2015 and two other questions, if the individual mandate is unconstitutional, and you pull that out from the rest of the law survive, and finally wednesday afternoon the states' argument that the medicaid requirements basically compel them to do something they don't want to do, violating the constitution and the tenth amendment. >> pete williams, thank you very much. you will be busy the next few days. >> that's right. let's bring in the center for american progress and, governor dean was supposed to join us, but he was delayed. georgia republican and dr. tom price, representative and dr. price, without slipping too far

into the policy, what do you think the supreme court is going to do? all going to come down, people i've talked to have suggested, two justices, kennedy and maybe even roberts. >> i think you are right, brian. as a physician, i can tell you it violates all the things we hold dear. i believe it's the individual mandate, not the government says you have to buy health insurance, it's that this law says you must buy a product and this is what it must be. the law clearly defines in specific ways what every plan must have. no single member of congress' plan would be compliant under the law. it is illegal and that's what i believe to be unconstitutional. i think that's what the court will find. and the question pete raised is important. if the individual mandate comes down, do all of the other things stand within it? if it does, it puts us in a very difficult situation. the prices would significantly increase for everybody as community rating and guaranteed

issue and those kinds of things that only work if you think they work if the individual mandate is in place. >> igor, and, listen, i know you discussed the public option in your excellent book, those in favor of the law and would disagree with the congressman will say this. people who don't have insurance are still engaged in commerce, because they are costing everybody else money by going to the doctor or the emergency room without health insurance. >> precisely. there is a tremendous cost shift borne by everyone. and that's where interstate commerce and the cost of insurance going across the nation. it's interesting, on tuesday, congress voted to repeal a board that was in the law. before they did that, they took out language in their own bill that specifically made this rationale that health care costs can be regulated in the interstate commerce clause, the commerce clause in the constitution. they took it out, they thought

this might be giving too much to defenders of the law. everyone admits health care costs are a problem and the fact that people are unsuinsured shis those costs all over and the government has to find a way to control spending. >> the big debate, and you're a doctor, i don't need to tell you this. will this bring down medical costs or make them skyrocket? everyone has a different world view? maybe we won't know until it's enacted in 2014. as an opponent. some is constitutional, some is not, would you be happy with a severing of the law? some in, some out? >> i don't think the rest loft works if you don't have the individual mandate, and the individual mandate is unconstitutional. the flaw in the argument is that at this is the only way to solve the problem. there are wonderful patient-centered solutions that can get every american covered with the health scare they want for themselves, not the government wants for them that solves portability and preexisting conditions, you ought not lose insurance if you

lose your job. you ought not be priced out of the market. you don't have to put the government in charge to solve it. >> quick, the last word, igor. are you in favor of the medicaid expansion? if so, why? >> i am. i think it gives people who are lower income a chance to find affordable coverage. the only patient-center option that works in the states is here in massachusetts when governor romney enacted the law here. very similar as we know to the affordable care act that has the mandate. and here we have the 99% insurance rate and now they are dealing with costs, but even the costs for the expanded population seem to be contained. so, you know, if the tax man cometh. more so if you are a successful american and just in to cnbc, a statement from jon corzine's

spokesperson about those esh-mas that came out today. what corzine is saying he did and did not order his assistant treasurer to do. more breaking news, right after this break. don't you go anywhere. forty years ago, he wasn't looking for financial advice. back then, he had something more important to do. he wasn't focused on his future but fortunately, somebody else was. at usaa we provide retirement planning for our military, veterans and their families. now more than ever, it's important to get financial advice from people who share your military values. call now for our free guide and tips on planning for your retirement this tax season.

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breaking news to cnbc right now. jon corzine releasing a statement after news tonight that a memo implicates him in transferring funds from customer accounts at mf global into the firm's funds as the firm was falling apart. something that would be against federal law, and also countering what he told congress. but here is the statement coming from a spoekszman for mr. corzine. "as mr. corzine testified before congress, he asked that the overdrafts with jpmorgan be corrected." he also testified "he never gave any instruction to misuse customer funds and never intended anyone at mf global to misuse customer funds" he further testified that he did not believe anything he said could reasonably be interpreted as an instruction to misuse customer funds and stands by

that testimony. he never directed ms. o'brien or anyone else regarding which account should be used to cure the overdrafts and never directed that customer funds should be used for that purpose, nor was he informed that customer funds had been used for that purpose. to the contrary, and mr. corzine testified, he recalls receiving written material, indicating the funds used to cure the overdrafts were appropriate for that purpose. wow. again, the news is this. e-mails leaking out of congress today, the assistant treasurer of mf global saying mr. corzine ordered about $200 million in customer funds to be transferred which would be against federal rules and also perhaps have purgered mr. corzine. mr. corzine's spokesman coming out with a very clear but. carefully worded statement indicating mr. corzine never authorized anybody to do this. the battle of words, he said/she said/they said is clearly on.

i'm sure cnbc will have much more. we have to switch gears. to america's most successful, the irs is watching you and may be coming for you. news today, irs is expanding audits of those making more than $500,000. and a stark increase for those making $1 million as well. the most heavily audited group? people who made more than $10 million. is this a washington class warfare attack or an attack on the free market itself now. let's bring in mark everson, vice chairman of alliant group. and gary shapiro of consumer electronics association. mark. >> thank you for having me. >> when you were at the irs, they elevated number of audits among the wealthy. did they find a higher level of cheating among the wealthy? in other words, is this going to work at generating more revenue, which is clearly the goal? >> well, yes, it does work, because as willie sutton said,

that's where the money is. if you're doing an audit of taxpayer, fireman, wage earner, simple document matching. the rich have more complex transactions and it's very much worth the time of the service to look at the returns. >> yeah, gary. i guess the argument is have the country not paying net federal income tax. so this is the place to look. >> i think it's a good place to look. what bothered me. only area they went down is people who have no adjusted gross income, about 50% of americans, so we obviously know there is a huge cash economy out there. people aren't paying taxes. the irs has a job. the real issue, is this whole approach we have to go after the rich. we have to go after everyone. people have to sacrifice, get the bush tax cuts, cut spending being sacrifice for everyone to solve our problems. >> mark everson, enough people

in those brackets that have legally or intentionally not paid? will that make a dent anyway? >> it does two things. number one, there is more money and two, perception of fairness. let's not overstate what was leased today, because if you go back to it, about 3/4 percentage increase came from the fact that there were fewer people earning a million dollars dramatically. down a third from two years ago. you're talking about coverage ratios. that's part of the. service is ramping up the efforts. but most of the increase is because of the denominator has gone down, if you will. >> talked about the cash economy. a lot of people would say drug dealers won't pay taxes, but they'll buy stuff, right? should we have a federal sales tax to capture that underground cash economy? >> we have to do something different. i'm for the bipartisan deficit commission. they said we have to look at raising taxes, have to cut spending.

going down a financial cliff and we need leadership, and, unfortunately, the president hasn't provided it. >> thank you. >> thank you. >> thank you. >> wait until you see what the obama administration wants to do now. we are going to dive right in after the break and these are targeted puns to the theme of the story. you'll want to hear it, coming up. ♪ our machines help identify early stages of cancer and it's something that we're extremely proud of. you see someone who is saved because of this technology, you know that the things that you do in your life, matter. if i did have an opportunity to meet a cancer survivor, i'm sure i could take something positive away from that. [ jocelyn ] my name is jocelyn, and i'm a cancer survivor.

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america already swimming in regulations, obama's government overreach might soon, be coming poolside to a town near you. all public pools have until may to put in wheelchair lifts or ramps. do private enterprises, hotels, and other need a one-size, fits all washington mandate to do this? the goal is law. you don't want to discriminate. some people can only walk in the water, given disabilities, but what kind of cost burden is this going to put on public pools, to the point where some may have to shut down, or charge higher admission, thus discriminate

against those who don't have money to get in them. >> it's important to note, our industry is about guest service and accommodation and we want to be able to provide for guests that are disabled and other guests. the costs are three fold. one, the cost of the lift. which is anywhere between $5,000 and $10,000 and to install a permanent lift which is the new reinterpretation of the guidelines is requiring, is anywhere between $10,000 and $15,000. you have to do electrical grounding work. the third cost we're concerned, is the cost if you are not in compliance with the department of justice regulation and that could cost you in fines up to $55,000, and the largest cost we're concerned about is the cost of frivolous lawsuits. if you are not technically in compliance with a fixed lift by the time the deadline comes around, you could face numerous fines, we estimate between $4,000 and $50,000 from frivolous lawsuits. that's the big concern. >> i image tlin say fleet of ambulance chasing attorneys

lined up to go after this, right? >> i think we can anticipate that. we have no idea what's out there but we have to protect ourselves. and a lot of smaller members very concerned, have small pools. unattended. not open year round. we're concerned that whatever guidance is given, it be very distinct and that we allow for flexibility. the best solution will be to have a flexible lift that you can share between pools and spas. >> do you believe there will be pools that are forced to shut down or close because they cannot absorb the costs? >> certainly we don't want to see that. the pool is offend times the best part of our property. we have heard concerns, if it's the cost of litigation versus the cost of keeping a pool open, they would rather see the pool close than take the risk that they be sued. >> thank you. >> thank you, brian. appreciate it. up next, paul ryan unveiling

a plan to cut corporate taxes, personal taxes, and have maid care and entitlement reforms. why are so many republicans against rye's plan? our free market panel is ready to go. they'll dive into that, next. ly progressive customers. i plugged in snapshot, and 30 days later, i was saving big on car insurance. i was worried it would be hard to install. but it's really easy. the better i drive, the more i save. i wish our company had something this cool. yeah. you're not... filming this, are you? aw! camera shy. snapshot from progressive. plug into the savings you deserve with snapshot from progressive. [ donovan ] i hit a wall.

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free market friday on "the kudlow report." larry will be back next week. paul ryan's plan cuts personal

income tax rates, corporate tax rates, medicare and other entitlement reforms, already dubbed the romney ryan plan by some democrats, it's understandable that rival presidential candidates ron paul and rick santorum are taking issue with it, but the plan barely squeaked through the house budget committee and passed by one vote, 19-18, thanks to the own side of the aisle, republicans. it's called "a disappointment for fiscal conservatives." why are republicans versus ryan going right now? here is former clinton white house aide keith boykin. and david pr dump doso, and a former bush white house aide. why so many republicans going after this? custom built for that. >> it is politics. paul ryan doing a lot of good things. corporate tax rates cut, and businesses to prosper, and want

them to hire folks this is about politics, the fact that two candidates certainly -- certainly congressman paul running for the presidency and want to win the louisiana primary, want to certainly galvanize the two behind them. and they are coming out against paul ryan's budget plan. very realistic and some members of congress up for re-election this year. >> my goodness, politics playing into the budget plan? i'm shocked. >> absolutely. >> what does ron paul hav gain? we had him on the program last night. talked to him about vilified it. why not embrace it with tweaks? >> i don't know this has political benefits. it is purism. and i would admit to being some of a purist. it's hard to complain that budget doesn't balance fast enough when 90% of revenues right now are consumed by debt

service and mandatory spending. there is no easy way to balance the budget quickly. rand paul, congressman paul's son has a plan in the senate that balances the budget a lot faster. but if you want to put a dent in things right now, it means telling seniors right now we're going to cut your social security. and nobody is going to do that. >> nobody is going to do this. this thing doesn't have a dog's chance of passing in the senate? >> no, it doesn't there is a war going on in the republican party about which direction to take. when paul ryan introduced his first plan last year, what did newt gingrich say? we don't need right-wing social engineering. what newt gingrich, republican presidential candidate said about the last plan. this is the same thing with different lipstick on it. what we have right now is the republican party can't figure out if it wants to be the party of the budget cutters and lose the election in 2012 or be the party that will win the election and reach out to middle america.

>> interesting to look at the budget. i don't think any republican has the guts, political moxie to go out to seniors and say i'm going to cut your health care. >> right. republicans talking. >> to your point, that's the only way we'll balance the budget. entitlement spending is too great. someone has to cut something. you don't get elected by telling people what you are not going to get. >> you have to sell people long-term benefits. what paul ryan is trying to do. get america to thing differently. you want to think of private sector, private solutions to -- and spending less public dollars. these are the ways that americans have to begin thinking if we want to solve problems. >> no, you have to have revenue. you cannot reduce the deficit. every sensible proposal that any bipartisan proposal for reducing the deficit and eliminating debt includes revenue increases. you can't do that -- >> tax increases. >> tax increases, revenue increases, you can't do it by

spending cuts, impossible to do. you know that, you know that, you know that. unfortunately, nobody wants to tell the american people that. people are afraid to tell the truth. >> they roll back reductions. 49% of the country not paying federal income tax. >> i was too busy talking about the last thing you said. revenue increases, why not dial back reductions? a family of four, mortgage, two kids, $75,000, probably pays zero in federal net income tax. >> you could do that, but you still have to raise new revenue. think about it from a budgetary amount, you still have to increase the amount of revenue, we have a $15 trillion debt, and have you deficit -- >> that's a way -- >> democratic side is the moxie to raise taxes the amount would you have toto put a dent in this. the buffett is a gimmick, an ideological gimmick.

where you will raise enough to raise taxes on rich people to one the government a week. >> there aren't enough rich people. >> i mean -- >> it doesn't work. >> most people -- >> would you have to have that. >> okay. >> look, if you repeal the bush tax cuts -- repeal the bush tax cuts for everyone. >> you agree, keith -- >> no -- >> just not about 250 or 357 k. >> the truth is, if you care about reducing the budget, then you have to eliminate all the bush tax cuts and cut spending. quite frankly, i don't think we need to be cutting the deficit right now, we need to be focused on getting the economy moving. it's a question of which lane are you in? >> so few people have guts to say that. every tax bracket, got to cut. a lot of people forget that these days. what do republicans do, let it fade away? >> they'll push the budget. that's the right thing to do.

when are you the only guy with something on the table that's somewhere in the realm of being responsible, you use that as an asset and take a couple of lumps for it. but i think that's great. good that they are putting forward a budget. senate democrats should do the same thing. rare tweet from donald trump. paul ryan's budget is very dangerous for the republicans, just before the election. be careful. >> thank you. have a wonderful night. wonderful weekend. larry will be back next week. have a great weekend. [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow.

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